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Rx Sales Through HDA Healthcare Distributors Remained Strong in 2021, Accounting for 94 Percent of Overall Market

HDA Research Foundation Factbook Reports Industry Trends in Pandemic’s Second Year

November 02, 2022 According to the HDA Research Foundation, approximately 94 percent of pharmaceutical sales were completed through healthcare distributors in 2021. As reported in the 93rd Edition HDA Factbook, sales through traditional healthcare distributors rose by a record-high 9.4 percent to reach $598.7 billion as the COVID-19 pandemic entered its second year.

Prescription drugs make up the majority (98 percent) of distributors' sales, split among sales of brand-name drugs (55.3 percent), branded specialty (33.7 percent), generic drugs (7.8 percent), generic specialty (0.6 percent) and biosimilar products (0.7 percent). Chain drug stores (34.3 percent) remain distributors' largest customer segment, followed by hospitals and HMOs (18 percent) and independent pharmacies (11.8 percent, though this last segment continues to shrink). While healthcare distributors continue to provide high service levels to customers, industry profit margins continued a seven-year downward trend, falling to a new record low of 0.3 percent after taxes.

View an infographic of key HDA Factbook data for the 2021 operating year.

“The significant increase in sales moving through traditional distributors reflects the economic and public health dynamics of 2021. As the latest HDA Factbook illustrates, delivery of essential medicines and healthcare products remained resilient and reliable despite market pressures,” said Perry Fri, Executive Vice President of Industry Relations, Membership and Education; and COO, HDA Research Foundation. “HDA-member healthcare distributors are continuing to provide high value — on razor-thin margins — to manufacturers and customers, which ultimately results in the ability of a patient to pick up a prescription when it is needed.”

Published annually since 1929, the HDA Factbook is based on surveys collected at the corporate level of HDA traditional distributor member companies with annual sales greater than $1 billion. Secondary data from leading healthcare industry organizations complement original data to illustrate overall distributor demographics as well as trends in operations, information technology, market characteristics, customers, and product mix, among other sections.

As reported within the new Factbook:

• A typical business day saw distributors picking more than 108,173 SKUs in 2021, compared to 104,030 in 2020. Each traditional distribution center processed 4,300 orders daily on average, with 5 percent of all orders requiring cold chain handling. Across all products, a distribution center typically warehoused 41,274 SKUs.
• Distributors filled 93 percent of invoice lines for “raw orders” in 2021. Typical reasons for unfilled orders were the manufacturers being unable to ship (78 percent) and distributors being out of stock (22 percent).
• Continued industry investments in automation and other process improvements led to productivity gains. Of note, approximately two-thirds of surveyed companies used automated methods, with 46 percent of invoice lines picked using automated technologies.
• Total annual costs associated with the returns process averaged $4.4 million per company in 2021, decreasing from $5.6 million in 2020. Additionally, distributors consider 84 percent of pharmaceutical products to be "saleable."
• In addition to the customer metrics reported, distributors worked with an average of 1,350 manufacturer suppliers in 2021.

The 93rd Edition HDA Factbook: The Facts, Figures & Trends in Healthcare (2022-2023) is available as a complimentary download from HDA.org. The publication was made possible through the support of gold sponsors Apotex Corp., Real Value Rx dba Hospital Pharmaceutical Consulting; silver sponsor Regeneron; and bronze sponsors Ascend Laboratories, LLC; IQVIA; Johnson & Johnson Health Care Systems Inc.; Pharmacy First; and Teva Pharmaceuticals.